A day after a drastic fall due to the unfavourable poll outcome, it appears domestic markets are likely to see a positive opening on Wednesday, suggest signals from trading at Gujarat Gift City. According to the indicator, Nifty could open with a gain of about 150 points (at 730 am), as Nifty futures in Gujarat Gift city is ruling at 22,035, as against Tuesday’s closing of 21,908.

However, analysts remain cautious as the Bharatiya Janata Party failed to get a complete mandate.

Domestic broking firm Emkay Global Financial has turned defensive after the adverse results, with the BJP missing an absolute majority. “Our Nifty target is cut to 22,000 as we anticipate a de-rating, given the heightened uncertainty. Our model portfolio positioning also turns defensive, it said, adding that “We go OW on FMCG/IT/Healthcare at the cost of Industrials.”

According to Amnish Aggarwal, Director – Research, Prabhudas Lilladher Pvt. Ltd: “We believe portfolio allocations and the future policies of the NDA Govt will be a key determinant of market movements. Severe jolt to BJP in Uttar Pradesh (new PDA social engineering), Maharashtra (fractured parties) and West Bengal will keep tricky reforms regarding PSU divestment, GST, labour laws, agriculture, modern retail/ E-com at bay.”

With elections around the corner in several major global economies, including the US, we would watch out for the likely stand of the US FED and other central banks, he said.

Incremental re-rating in PSU, Capital Goods, Infra, Defence, and Railways looks unlikely given stretched valuations until policy clarity emerges, he further said. “Given the expected focus on rural India and normal monsoon, sectors such as consumer, auto, pharma, private banks, durables, etc, might come into focus, where we had recently increased weights in the model portfolio,” he added.

However, Pradeep Gupta, Co-founder & Vice-Chairman, Anand Rathi Group, said: Historical data suggests that despite initial volatility, markets tend to recover and even thrive in the longer term. For instance, even after the 2014 and 2019 elections, the Indian stock market saw significant gains in the months following the election results.

“Investors are advised to focus on long-term strategies such as maintaining a diversified portfolio and avoiding panic selling. Strong fundamentals and resilience against political changes are crucial for navigating market volatility,” he advised.

Experts said the focus will shift to the upcoming Budget of the new government.

Ajay Menon, MD & CEO, Broking & Distribution, Motilal Oswal Financial Services, said: Once the new government is formed, it will present its first and full budget for FY25 in the next few weeks, where themes like capex, manufacturing, rural, consumption, and credit lending will be back in focus.

“The rural and consumption theme would also pick up pace with the onset and progress of the monsoon, which is predicted to be above normal this year. While market volatility may continue in the near term, retail investors should take this correction as an opportunity to accumulate quality names in three-four tranches. Over the next few days, the narrative around government formation and RBI monetary policy would take centre stage,” he said.

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